Kuwait's trade surplus shrinks in 2Q of 2012

Kuwait's trade surplus shrank in the second quarter of 2012, amid remarkable decline in oil revenues and hike in imports bill, a specialized economic report showed Wednesday. "After soaring to a record-high of KD 7.3 billion in the first quarter of the year, Kuwait's trade surplus narrowed to KD 6.6 billion in 2Q12, estimated at 13 percent of annual 2012 GDP," reads the report "Kuwait Economic Brief" released by the National Bank of Kuwait. "This was the result of a combination of lower oil export receipts and a rising imports bill. Nevertheless, this is still the second highest surplus ever recorded, and is KD 1.1 billion higher than a year ago. Steady oil prices should support exports and large surpluses ahead, while strong imports point to robust growth in the economy, particularly in the consumer sector." The report stated that the oil export revenues dropped by KD 0.5 billion in 2Q of 2012 to just under KD 8 billion, as Kuwait export crude prices fell by USD 11 per barrel in the second quarter. "Although oil exports recorded annual growth of some 18 percent, this was lower than the rates recorded in the past year. The second half of 2012 should see little change in oil export receipts as oil prices have remained almost flat." Worse still, the non-oil exports also contracted at a similar rate, and remained under KD 0.6 billion in 2Q of 2012. "This was mainly driven by a fall in exports of ethylene products, as petrochemical prices were likely impacted by lower oil prices. Year-on-year, however, non-oil exports were up by some KD 0.1 billion," the report added. Data also showed that after slipping slightly in the first quarter, imports recovered in the second quarter of 2012, growing by almost KD 0.1 billion to KD 1.9 billion. "Yearly growth in imports also accelerated to 15 percent, the fastest rate since first quarter of 2008. This strong growth rate in imports is consistent with the vibrant consumer sector in Kuwait. It also supports our expectation of robust growth in the non-oil sector in the period ahead."